SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported):
May 21, 2003
Daisytek International Corporation
(Exact Name of Registrant as Specified in Charter)
Delaware | 0-25400 | 75-2421746 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
1025 Central Expressway South, Suite 200
Allen, Texas 75013
(Address of Principal Executive Offices, including zip code)
(972) 881-4700
(Registrant’s Telephone Number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 16, 2003, Daisytek International Corporation (“Daisytek”) announced that the board of directors of U.K.-based ISA International plc (“ISA,” a wholly-owned subsidiary of Daisytek) had appointed a Voluntary Administrator, PriceWaterhouseCoopers, to assume day-to-day management of the ISA operations. Subsequently, on May 21, 2003, the Voluntary Administrator sold the business and assets of the U.K. and Republic of Ireland businesses and the equity in the Swedish and Norway subsidiaries for an undisclosed sum to a newly formed entity called ISA Trading Limited. The Voluntary Administrator continues to progress on sale and restructuring options for the German and French businesses.
As a result of the appointment of the Voluntary Administrator and the sales completed on May 21, 2003, as well as anticipated future sales or restructuring activities, Daisytek anticipates that no value in ISA International plc will be retained by Daisytek.
Daisytek began using consolidation accounting for its investment in ISA International plc effective May 7, 2002.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
| (a) | Financial statements of businesses acquired. |
| Not | applicable |
| (b) | Pro forma financial information. |
Pro forma financial information required pursuant to Article 11 of Regulation S-X as of December 31, 2002 and for the nine months ended December 31, 2002 is filed herewith beginning on page P-1.
| (c) | Exhibits. |
| 99.1 | Press release issued by Daisytek International Corporation dated May 21, 2003. |
| 99.2 | Press release issued by PriceWaterhouseCoopers dated May 21, 2003. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
DAISYTEK INTERNATIONAL CORPORATION | ||
By: | /s/ ERIC T. LOGAN | |
Eric T. Logan Interim Chief Financial Officer | ||
Dated: June4, 2003
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The unaudited pro forma financial information of Daisytek International Corporation (together with its subsidiaries, “Daisytek” or the “Company”) gives effect to the disposition of ISA International plc (“ISA”), a pan-European distributor of computer supplies, which indirectly owns 47% of Kingfield Heath Ltd., a U.K.-based wholesaler of office products. The unaudited pro forma balance sheet data at December 31, 2002 presents adjustments for the ISA disposition as if the transaction was completed on December 31, 2002. The unaudited pro forma statement of operations data for the nine months ended December 31, 2002 presents adjustments for the ISA disposition as if the transaction had been completed on May 7, 2002. Daisytek began using consolidation accounting for its investment in ISA International plc effective May 7, 2002. Prior to May 7, 2002, the Company’s investment in ISA was accounted for using the cost method.
The unaudited pro forma financial information should be read in conjunction with the historical consolidated financial statements and the related notes thereto of the Company that have previously been reported. The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the disposition of ISA had been consummated at the dates indicated, nor is it indicative of future operating results or financial position.
P-1
DAISYTEK INTERNATIONAL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AT DECEMEBER 31, 2002
(In thousands)
Company Historical | ISA Disposition (1) | Company Pro Forma | ||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 11,738 |
| $ | (231 | ) | $ | 11,507 |
| |||
Accounts receivable, prepaid expenses and other current assets |
| 278,057 |
|
| (74,773 | ) |
| 203,284 |
| |||
Inventories, net |
| 190,698 |
|
| (40,996 | ) |
| 149,702 |
| |||
Total current assets |
| 480,493 |
|
| (116,000 | ) |
| 364,493 |
| |||
Property and equipment, net |
| 41,098 |
|
| (7,957 | ) |
| 33,141 |
| |||
Other assets |
| 15,605 |
|
| (10,685 | ) |
| 4,920 |
| |||
Goodwill, net |
| 73,078 |
|
| (29,807 | ) |
| 43,271 |
| |||
Total assets | $ | 610,274 |
| $ | (164,449 | ) | $ | 445,825 |
| |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Current portion of long-term debt | $ | 26,225 |
| $ | (23,253 | ) | $ | 2,972 |
| |||
Trade accounts payable, accrued expenses and other current liabilities |
| 208,024 |
|
| (78,457 | ) |
| 129,567 |
| |||
Total current liabilities |
| 234,249 |
|
| (101,710 | ) |
| 132,539 |
| |||
Long-term debt, less current portion |
| 198,571 |
|
| (30,638 | ) |
| 167,933 |
| |||
Commitments and contingencies | ||||||||||||
Shareholders’ equity: | ||||||||||||
Preferred stock |
| — |
|
| — |
|
| — |
| |||
Common stock |
| 203 |
|
| — |
|
| 203 |
| |||
Additional paid-in capital |
| 123,676 |
|
| — |
|
| 123,676 |
| |||
Retained earnings |
| 79,115 |
|
| (32,101 | ) |
| 47,014 |
| |||
Accumulated other comprehensive loss |
| (13,848 | ) |
| — |
|
| (13,848 | ) | |||
Treasury stock at cost |
| (11,692 | ) |
| — |
|
| (11,692 | ) | |||
Total shareholders’ equity |
| 177,454 |
|
| (32,101 | ) |
| 145,353 |
| |||
Total liabilities and shareholders’ equity | $ | 610,274 |
| $ | (164,449 | ) | $ | 445,825 |
| |||
See accompanying note to Unaudited Pro Forma Financial Information.
P-2
DAISYTEK INTERNATIONAL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2002
(In thousands, except per share data)
Company Historical | ISA Disposition | Company Pro Forma | ||||||||||
Net revenues | $ | 1,334,020 |
| $ | (384,143 | ) | $ | 949,877 |
| |||
Cost of revenues |
| 1,215,865 |
|
| (335,786 | ) |
| 880,079 |
| |||
Gross profit |
| 118,155 |
|
| (48,357 | ) |
| 69,798 |
| |||
Selling, general and administrative expenses |
| 139,135 |
|
| (43,941 | ) |
| 95,194 |
| |||
Income from operations |
| (20,980 | ) |
| (4,416 | ) |
| (25,396 | ) | |||
Interest expense, net |
| 11,397 |
|
| (2,433 | ) |
| 8,964 |
| |||
Loss from continuing operations before income taxes |
| (32,377 | ) |
| (1,983 | ) |
| (34,360 | ) | |||
Benefit for income taxes |
| 7,004 |
|
| 1,000 |
|
| 8,004 |
| |||
Loss from continuing operations before equity in net income of affiliate and minority interest |
| (25,373 | ) |
| (983 | ) |
| (26,356 | ) | |||
Equity in net income of affiliate and minority interest |
| 1,220 |
|
| (1,220 | ) |
| — |
| |||
Loss from continuing operations | $ | (24,153 | ) | $ | (2,203 | ) | $ | (26,356 | ) | |||
Net loss per common share: | ||||||||||||
Basic | $ | (1.32 | ) | $ | (1.44 | ) | ||||||
Diluted | $ | (1.32 | ) | $ | (1.44 | ) | ||||||
Weighted average common and common share equivalents outstanding: | ||||||||||||
Basic |
| 18,282 |
|
| 18,282 |
| ||||||
Diluted |
| 18,282 |
|
| 18,282 |
| ||||||
P-3
NOTE TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
Note 1. Adjustments to the Unaudited Pro Forma Condensed Consolidated Balance Sheet
Adjustments reflect the disposition of ISA. As a result of the appointment of the Voluntary Administrator and the sales completed on May 21, 2003, as well as anticipated future sales or restructuring activities, Daisytek anticipates that no value in ISA International plc will be retained by Daisytek.
Adjustments are as follows (in thousands):
Decrease in current assets | $ | 133,285 | |
Decrease in property, plant and equipment, net of accumulated depreciation |
| 7,957 | |
Decrease in other assets |
| 10,685 | |
Decrease in goodwill and other intangible assets, net of accumulated amortization |
| 29,807 | |
Decrease in current liabilities |
| 101,710 | |
Decrease in long-term debt |
| 30,638 | |
Net ISA assets disposed of |
| 49,386 | |
Decrease in retained earnings resulting from the disposition of ISA, net of tax at the Company’s assumed tax rate of 35% |
| 32,101 | |
Increase in deferred tax asset resulting from the loss on disposition of ISA, using the Company’s assumed tax rate of 35% |
| 17,285 |
P-4
Index to Exhibits
Exhibit Number | Description | |
99.1 | Press release issued by Daisytek International Corporation dated May 21, 2003. | |
99.2 | Press release issued by PriceWaterhouseCoopers dated May 21, 2003. |
